Newsroom, VAT | 8. December 2022

The EU Commission approves “VAT in the Digital Age” reform

The most ambitious reforms to the EU's VAT system in decades are expected to raise billions of euros in tax revenue and offer substantial savings to e-commerce businesses and sellers. by

ViDA has come to life 2
ViDA has come to life 2

Members of the European Commission adopted on 8 December 2022, adopted the proposal for a Council Directive amending the VAT Directive 2006/112/EC as regards “VAT in the Digital Age”. This reform comprises three pillars: real-time and structured e-invoicing for all businesses with intra-Community supplies, the collection of VAT through digital platforms for accommodation and transport, and the extended EU VAT return for e-commerce via OSS. These changes will be phased between 2023 and 2028 once Member States have adopted them in the Council of the EU.

The three reform pillars: 

  1. Digital Reporting Requirements (DRR) and e-Invoicing;
  2. Platform for tax collection in the travel and accommodation industry;
  3. Uniform VAT registration for own account (B2C) transactions.

The European Commission expects these measures to save e-commerce sellers €1 billion in compliance costs and curb €11 billion of the €50 billion lost to carousel fraud. Shifting the VAT collection obligation to travel and accommodation platforms will generate a further EUR 6.5 billion. Implementing the Digital Reporting Requirements will incur high costs: €11.3 billion for businesses and €2.2 billion for tax authorities.

Reduce the recent EU VAT gap of €93 billion in lost revenue by more than €4 billion per year, increase platform revenues by €6 billion per year and save e-commerce sellers €1 billion per year in compliance costs.

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